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Tuesday, July 14, 2015

Work is continuing to create a multimillion pound pot of funding to provide equity and loan finance to start-ups, growing early stage companies and larger companies with ambitions for strong growth.

Chancellor, George Osborne, believes that small business across the north of England could benefit from funds of over £400m thanks to a new wave of European funding. The Government is working with Local Enterprise Partnerships (LEPs) and local authorities to secure fresh funding for small businesses in the north from EU Regional Funds, which would be made available for northern SMEs later this year.

The plans would form the next round of JEREMIE (Joint European Resources for Micro to Medium Enterprises) funding for the Northern Powerhouse.

Finance Yorkshire was the first European JEREMIE initiative to become fully invested in England.

The initial £90m fund had three investment teams, Seedcorn Finance, Business Loans and Equity Linked Investments. It secured £45m from the European Investment Bank, together with £30m investment from the European Regional Development Fund (ERDF) and £15m from the Government via Yorkshire Forward. Around £28m was invested in South Yorkshire companies.

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Access to finance is a key pillar of both the Sheffield City Regions LEP's Strategic Economic Pan and as part of the city region's Growth Hub, a "Centre of Expertise" will become the gateway to a range of finance and investment products, improving coordination and helping businesses find the package of loans and grants they need to be able to grow.

The Sheffield City Region LEP has been keen to boost access to finance through the development of a loan and equity funding using the JEREMIE model and a Holding Fund, and has been working with other LEPs to explore a future JEREMIE initiative and integrating it with its own £50m RGF Business Growth Fund.

Chancellor of the Exchequer George Osborne said: "Small business are the lifeblood of the Northern Powerhouse and this funding has the potential to make an enormous difference to hundreds of SMEs right across the north.

"From supporting thousands of northern companies through increasing the Annual Investment Allowance and giving businesses an extra £1,000 with an increase in the Employment Allowance, my Budget last week backed businesses across the north and this funding has the potential to do even more."

The Sheffield City Region LEP has put together a plan for making the best of use of EU structural funds. The city region can expect €203m for 2014 to 2020 as part of €6.2bn (£5.3bn) of EU Structural and Investment Funds to boost growth under a simplified "Growth Programme." In the previous settlement, South Yorkshire received €410m. From 2014-2020 this will be cut to €180m.

The LEP will only have an "advisory role" over how the European funding is spent. The final decisions will be made in Whitehall as the Government considers the role of Intermediary Body as being too risky in the context of managing European funds and the European Commission has not accepted that LEPs are an appropriate body to take decisions.